First USA, GE to Offer Co-Branded Credit Cards

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Bank One Corp.'s First USA credit card unit plans to combine its direct channels with the strong customer base of General Electric Co.'s GE Capital financial services subsidiary to begin marketing co-branded credit cards in January.

The pact is part of a series of agreements announced this month between the two firms. In addition to the co-branding partnership, the companies formed a private-label credit card joint venture that will fuse $1 billion in GE Capital receivables with First USA's $1.6 billion private-label card portfolio, and First USA agreed to buy $2.2 billion of GE Capital's Visa and MasterCard receivables.

First USA, Wilmington, DE, and GE Capital, Stamford, CT, will begin marketing the co-branded product shortly after the close of the portfolio sale, which should be completed by the end of the month. Under the deal, First USA will issue MasterCard and Visa credit cards that feature the GE brand.

Spokesman Jeff Uncle said the company is unlikely to shift from its usual direct-to-consumer approach.

"It's going to be similar to things First USA has done in the past with the direct mail, telemarketing and taking advantage of the Internet channel. All things that we use right now would be things that we would use for this product," Uncle said, adding that First USA will seek out targets for the card from multiple lists and other sources like credit bureau data.

GE Capital will continue to own and operate its GE-branded bankcards and retailer co-branded cards outside the United States, and the firm will continue to run its Utah-based corporate card business.

Under the separate private-label agreement, GE Capital, which has extensive experience in private-label cards, will manage the program, while First USA will contribute its existing private-label business located in Dayton, OH. Private labels are retailer-specific cards, and the agreement will include existing cards from a variety of merchants. First USA and GE Capital will each own 50 percent of the venture, and First USA doesn't plan to move its Dayton operations or any of its employees to a new location.

Financial terms of the $2.2 billion portfolio sale were not disclosed. The deal's completion awaits the expiration or termination of an antitrust waiting period. The purchase continues First USA's strategy of buying credit card portfolios.

GE Capital holds assets of $250 billion and is involved in several financial services, including equipment management, specialized financing, specialty insurance and consumer services like car leasing, mortgages and credit cards. The company brings 20 million established customers to the co-branding partnership with First USA.

GE Capital's consumer financial services unit sells consumer bankcards, while its corporate expense management services business sells cards designed for medium- and large-sized companies.

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